A Housing Market Built on Mud Takes Off, and Then Goes Thud

Mining Slump Leaves Village With a Hut Glut; Rooms Without a View for Rent, Dirt Cheap

By

Robert Guy Matthews

Updated July 9, 2009 11:59 p.m. ET

NIONSOMORIDOU, Guinea -- This West African village doesn't have running water or electric lights. Most people get here by walking barefoot along a dirt path. The remote mountain community has one up-to-the-minute feature, though: a housing bust.

Rents had risen in recent years, and local residents and home builders let their enthusiasm get the better of them, turning out a spate of new construction. Now, rows of newly built houses stand empty in the village, and rents have been cut in half. So far, not so different from Miami or Phoenix. Except that these homes are one-room, windowless mud-brick huts, and the rent is about $6.50 a month.

A remote rural village in the mountains of Guinea doesn't have running water or electric lights, but it has one up-to-date feature: a housing bust. Robert Guy Matthews reports.

For centuries, Nionsomoridou faced no risk of a housing-market crash, because it didn't have a housing market. There were no unused houses. If a son married and needed room for children, his relatives put up a new hut next door, on village land that is communally owned.

Then came the global commodities boom, with far-reaching effects on Nionsomoridou, situated deep amid lushly forested mountains rich in gold, diamonds and one of the world's largest virgin iron-ore seams.

Mining giant Rio Tinto announced three years ago that it had won permission to develop an iron-ore mine here and would need thousands of workers, far exceeding the labor force of this and other tiny communities hereabouts. Workers and their families began to stream in from elsewhere in Guinea and West Africa, all needing a place to stay.

Some villagers, spotting opportunity, moved in with relatives and offered their own huts to the newcomers, giving the hamlet its first rudimentary rental market. It began as barter, with the tenants paying in food or by having family members help out in the bean and rice fields. Soon, mine workers began paying cash rents, and these marched quickly upward. Some villagers took the budding housing boom into its next phase: They used their hut rent to build more huts -- to rent out to what they assumed would be more people in need of huts.

What the tenants got was a single small room with a thatched roof that peaks in a cone shape 20 feet off the ground. Doors are sometimes just a hanging length of cloth. Floors are packed earth. The houses have no bathrooms or other plumbing, and no heat -- one thing the local climate provides in abundance.

ENLARGE

Huts such as these were hit by a glut in Nionsomoridou, Guinea, after residents added accommodations for mine workers who have since left.
Alamy

As demand and rents rose, reaching the Guinea-franc equivalent of $20 a month, three or four mine workers often would move into a single hut to share the rent.

Villagers playing the hut-rental game sometimes amassed enough money to build themselves bigger homes, with three rooms instead of one and with a roof of tin instead of thatch. Seen from the air, these tin roofs twinkle like flashing lights in the searing midday heat. "That is the sign of wealth around here," said a Rio Tinto helicopter pilot flying 3,000 feet above the settlements.

But in late 2008 the commodity boom stalled, sending prices for metals down steeply and prompting mining companies to shelve expansion plans, cut their production and lay off workers. Rio Tinto, for instance, shut down two-thirds of the drilling rigs that bore into the mountain to get at ore.

Rio Tinto reduced output at its existing exploration operations in the vicinity and stopped work at the mining operations it was developing not far from Nionsomoridou, partly because of a dispute with the government over exploration rights. The company idled most of its contractors, costing about 600 people their jobs, although for many of the miners whom Rio Tinto had employed directly, the company says it is providing work digging wells and building other infrastructure in the villages.

Salif Camara, a 24-year-old who speaks a language called Malinke, lost his job on a team manning the drills. His pay had been about a million Guinea francs a month, or about $200, a fantastic wage for this area that enabled him to help out his parents and begin buying tin and other materials for a home. He made plans to build a house of three rooms for his wife and 10 to 15 members of his extended family.

Now, toiling as a field hand instead of a miner, Mr. Camara earns no more than a tenth of his old pay, not enough to accumulate more building materials. There are no local banks or credit unions to help him. He lives in a crowded hut with his wife and other family members.

Mr. Camara has tucked under his cot the 15 or so tin sheets he had acquired, and he has hidden his mud bricks under piles of sticks along a path near the hut. "I have protected it well," he said of the cache as he walked by, explaining that sharing is expected here. If others knew he had unused building materials and someone needed them, he would have to turn them over.

Without the mines, many families spend their time working in the fields and selling produce such as cucumbers, rice and peanuts at the market square. Others at the square sell surplus clothing. On a recent day, one man wore a T-shirt reading, "Don't Blame Me, I Voted for McCain/Palin."

Oumarou Kamara, 20, was earning about $100 a month working for a mining contractor. "I was feeding my family, feeding my mother and feeding kids," he said. Ever since he lost that job at the start of the year, "we eat just once a day," he said, often cassava porridge with an okra sauce called tipa.

Abourahne Drawara has a slightly different problem. He is a builder. He has little hope of recovering the $300 worth of materials and labor he has invested in each hut he built. Rents, he says, "are still falling."

And yet, along a dusty trail here sit piles of sand and gravel, about 140 truckloads in all. They are part of a housing project planned last year by a developer from Guinea's capital city of Conakry and a local builder named Lounceny Bamba. Despite the communal ownership of village land, Mr. Bamba says elders sold some for the project, for about 12 million francs, or $2,500.

Planning began when the mining boom was still going strong. What about today? "We are moving ahead very slowly," Mr. Bamba said.

The mining slump helps in one way. "With so many people out of work here, it will not be hard to find labor," he said.

The first two of the project's tin-roofed huts are almost finished. The plan calls for 50, with completion in 2010. Mr. Bamba and the developer in the capital city are betting that the mining companies will resume their plans to expand operations here, and that once again, workers will pour in and need places to stay. The housing boom may have gone bust in Nionsomoridou, but Mr. Bamba plans to be ready for the next one.

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